Gain the financial flexibility you need without disrupting your long-term investment strategy
Securities-based borrowing lets you borrow using eligible securities as collateral, so you can get money you need today without disrupting your investment portfolio. You can choose from different lines of credit to access funds for practically any purpose. And as long as your account has sufficient eligible securities to use as collateral, this type of credit line may be easier to obtain and more cost-effective than other alternatives.
Securities-based borrowing offers a number of attractive features to meet your needs:
- Access to cash when you need it
- Typically lower rates than other forms of credit
- No set-up, non-use, or cancellation fees
- Ability to borrow between 50% and 95% of your eligible assets' value, depending on the collateral and type of line of credit you receive
How you use these credit solutions is as unique as you. Some of the most common uses include:
Wells Fargo Advisors gives you access to the following securities-based borrowing options:
|Margin Account5||Priority Credit Line||Secured PrimeLine®
Line of Credit
|Product Description||A convenient financing source to pursue investment opportunities or to meet other personal financing goals offered through Wells Fargo Advisors.||A line of credit backed by your eligible securities offered through Wells Fargo Advisors.||A line of credit backed by your eligible securities offered through Wells Fargo Bank.||Customized loans or lines of credit with flexible advance rates and terms offered through Wells Fargo Bank.|
|Borrowing Need3||Any amount||Any amount; generally for $100,000 to $1 million||$100,000 minimum; generally for $500,000 to $5 million||$1 million minimum; generally for $5 million and up|
|Fund Access||Check, check card, and wire transfer4||Check, online, ACH, and wire transfers||Check, online transfer, and wire transfer||Wire transfer|
|Uses||Anything including to purchase securities||Anything except to purchase securities or pay down margin||Anything except to purchase securities or pay down margin||Anything except to purchase securities or pay down margin|
|Typical loan-to-value||50-90% based on asset class||60%-90% based on asset class||50% - 95% based on asset class and underwriting option||50% - 95% based on asset class|
|Term||No set expiration||No set expiration||60 months||Varies|
|Interest Rate Index||Wells Fargo Advisors' Base Rate see rates below||Wells Fargo Advisors' Base Rate3 see rates below||Wells Fargo Bank's Prime rate or LIBOR||Wells Fargo Bank's Prime rate or LIBOR|
|Payment Required||No minimum monthly interest payment required||No minimum monthly interest payment required||Monthly interest only||Monthly interest only|
|Underwriting Requirement||Collateral review||Collateral review||Collateral and borrower review||Collateral and borrower review|
Call your Financial Advisor to determine if a securities-based borrowing strategy may be right for you.
Carefully consider whether securities-based borrowing is right for you:
Securities-based borrowing has special risks and is not suitable for all investors. If the market value of pledged securities declines below required levels, you may be required to pay down your line of credit or pledge additional eligible securities in order to maintain it; otherwise the firm may require the sale of some or all of the pledged securities. The sale of pledged securities may cause adverse tax consequences.*
The risks of securities-based borrowing include:
- Market fluctuations that may cause the value of pledged assets to decline
- A decline in the value of your securities that could result in selling your securities to maintain equity
- Adverse tax consequences as a result of selling securities*
* Wells Fargo Advisors and its affiliates are not tax or legal advisors.
|Household Assets Under Management With Wells Fargo Advisors||<$250k||>$250k
|Interest Rate||Base Rate + 0.75%||Base Rate - 0.75%||Base Rate - 1.25%||Base Rate - 1.75%||Base Rate - 2.25%||Base Rate - 2.75%|
|Debit Balance||Rate of Interest|
|$0 to $24,999.99||Base rate + 3.625%|
|$25,000 to $49,999.99||Base rate + 2.500%|
|$50,000 to $99,999.99||Base rate + 2.375%|
|$100,000 to $249,999.99||Base rate + 0.750%|
|$250,000 to $499,999.99||Base rate + 0.625%|
|$500,000 to $999,999.99||Base rate + 0.500%|
|$1,000,000 to $4,999,999.99||Base Rate|
|$5,000,000 to $9,999,999.99||Base rate - 0.500%|
|$10,000,000 +||Base rate - 0.750%|
|Unpaid Cash Account Balance||Base rate + 3.625%|
Base rate as of June 1, 2013 = 5.500%
The Base Rate is set at our discretion with reference to commercially recognized interest rates, industry conditions relating to the extension of margin credit and general credit market conditions. The annual rate of interest will change without prior notice to you, in accordance with changes in our Base Rate.
*Effective as of December 30, 2015,
Margin Interest Rates will change. See the table below.
|Margin Debit Balance||Standard Rates|
|$0 to $24,999.99||Base rate + 3.50%|
|$25,000 to $49,999.99||Base rate + 3.00%|
|$50,000 to $99,999.99||Base rate + 2.50%|
|$100,000 to $249,999.99||Base rate + 2.00%|
|$250,000 to $499,999.99||Base rate + 1.50%|
|$500,000 to $999,999.99||Base rate + 1.00%|
|$1,000,000 to $4,999,999.99||Base rate + 0.50%|
|$5,000,000 to $9,999,999.99||Base rate + 0.00%|
|$10,000,000 and up||Base rate – 0.50%|
|Cash Account||Base rate + 3.50%, regardless of
debit size or household
assets under management
|less than $250,000||0%|
|$250,000 to $499,999.99||-.5%|
|$500,000 to $999,999.99||- 1.0%|
|$1,000,000 to $2,499,999.99||- 1.5%|
|$2,500,000 to $4,999,999.99||- 2.0%|
|$5,000,000 and up||- 2.5%|
1Wells Fargo Advisors and its affiliates are not tax or legal advisors.
2Financing real estate with a securities-based line of credit carries risk and may not be appropriate for your needs. A complete assessment of your circumstances is needed to help you determine which type of loan provides the best fit. All loans are subject to credit approval. Wells Fargo & Company and its affiliates do not provide tax or legal advice. Please consult your tax or legal advisors to determine how any credit may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your taxes are prepared.
3Subject to minimum equity requirements.
4Command checks and debit cards are only available through the Command Asset Program.
5Margin borrowing may not be suitable for all investors. When you use margin, you are subject to a high degree of risk. Market conditions can magnify any potential for loss. The value of the securities you hold in your account, which will fluctuate, must be maintained above a minimum value in order for the loan to remain in good standing. If it is not, you will be required to deposit additional securities and/or cash in the account or securities in the account may be sold.
Secured PrimeLine, Secured Term Loan and Custom Loans are offered by Wells Fargo Bank, N.A. (member FDIC), a banking affiliate of Wells Fargo & Company. Other banking services from Wells Fargo Bank, N.A., and its affiliates are available through the Lending & Banking Services Group of Wells Fargo Advisors. All loans and lines of credit are subject to credit approval, verification, and collateral evaluation. Initial credit decision is subject to your meeting specific underwriting requirements, and final approval will be based upon your satisfying these requirements. Certain restrictions apply. Programs, rates, terms, and conditions are subject to change without advance notice. Products are not available in all states.
Wells Fargo Advisors, LLC, or Wells Fargo Advisors Financial Network, LLC, as applicable, will act as broker-dealer, and First Clearing, LLC (“FCC”), will act as lender and carry Margin and Priority Credit Line Accounts. FCC is a separate, registered broker-dealer, Member SIPC, and non-bank affiliate of Wells Fargo & Company.
Securities-based lending has special risks and is not suitable for everyone. If the market value of your pledged securities declines below required levels, you may be required to pay down your loan or line of credit or pledge additional eligible securities in order to maintain it, or the lender may require the sale of some or all of your pledged securities. The sale of your pledged securities may cause you to suffer adverse tax consequences. You should discuss the tax implications of pledging securities as collateral with your tax advisor. Wells Fargo Advisors and its affiliates are not tax or legal advisors. All securities and accounts are subject to eligibility requirements.
Please read all lines of credit documents carefully. The proceeds from some securities-based lines of credit may not be used to purchase additional securities or pay down margin. Securities held in a retirement account cannot be used as collateral to obtain a loan. Securities purchased in the pledge account must meet collateral eligibility requirements. Other account fees, fund expenses, brokerage commissions, and service fees may apply.